Dolphin Entertainment, Inc. - Quarter Report: 2010 June (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-50621

DOLPHIN DIGITAL MEDIA INC.

(Exact name of registrant as specified in its charter)

Nevada (State of incorporation)		86-0787790 (I.R.S. employer identification no.)

804 Douglas Road, Executive Tower Building, Suite 365, Miami, Florida 33134
(Address of principal executive offices, including zip code)

(305) 774-0407
(Registrant’s telephone number)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No þ

The number of shares of Common Stock outstanding was 62,823,411 as of August 23, 2010.

 

 

DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION			1
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS			1
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			12
ITEM 4. CONTROLS AND PROCEDURES			15
PART II — OTHER INFORMATION			16
ITEM 1. LEGAL PROCEEDINGS			16
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			17
ITEM 5. OTHER INFORMATION			17
ITEM 6. EXHIBITS			17
Exhibit 31.1
Exhibit 32.1

ITEM 1. FINANCIAL INFORMATION

DOLPHIN DIGITAL MEDIA INC AND SUBSIDIARIES
Consolidated Balance Sheets

		June 30,				December 31,
		2010				2009
						(Audited)
ASSETS
Current
Cash		$	796			$	3,218
Inventory			88,276				91,860
Prepaid Expenses			9,295				211,128
Advances			57,000				—
Other Current assets			694				635
Total Current Assets			156,061				306,841
Intangible Assets			1,757,161				1,208,268
Total Assets		$	1,913,222			$	1,515,109
LIABILITIES
Current
Cash overdraft		$	22,597			$	14,087
Accounts payable			1,785,719				1,573,028
Other current liabilities			368,472				315,350
Advances from Related Parties			904,000				1,079,000
Notes payable (Net of discount of $42,000 and $84,000, respectively			258,000				216,000
Total Current Liabilities			3,338,788				3,197,465
Long Term Liabilities
Notes payable convertible (Net of discount of $63,506 and $73,032, respectively			236,494				230,143
Total Liabilities			3,575,282				3,427,608
STOCKHOLDERS’ DEFICIT
Common Share Capital, $0.015 par value, 100,000,000 shares authorized, 61,223,411 issued and outstanding as of June 30, 2010 and 56,959,454 issued and outstanding as of December 31 2009			937,246				897,141
Preferred Share Capital $0.001 par value, 10,000,000 shares authorized, 500,000 shares issued and outstanding			500				500
Additional Paid-In Capital			27,386,451				24,854,441
Accumulated Deficit			(29,724,192	)			(27,529,526	)
Comprehensive Loss / Income			(262,065	)			(135,055	)
Total Stockholders’ Deficit			(1,662,060	)			(1,912,499	)
Total Liabilities and Stockholders’ Deficit		$	1,913,222			$	1,515,109

The accompanying notes are an integral part of these consolidated financial statements.

DOLPHIN DIGITAL MEDIA INC AND SUBSIDIARIES
Consolidated Income Statements
For the three and six Months Ended June 30, 2010 and 2009

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
Revenues		$	222			$	—			$	478			$	—
Cost of Sales			80				—				320				—
Gross Profit			142				—				158				—
Expenditures:
General and Administrative			200,860				602,060				571,084				1,714,042
Legal and Professional Fees			344,731				60,349				560,733				203,707
Depreciation			—				7,531				—				14,611
Total Expense			545,591				669,940				1,131,817				1,932,360
Loss from Operations			(545,449	)			(669,940	)			(1,131,659	)			(1,932,360	)
Other Expenses
Finance charges			21,000				—				987,649				—
Income (Income)			—				(3	)			—				(3	)
Interest Expense			37,633				22,937				75,741				45,191
Total Other Expenses			58,633				22,934				1,063,390				45,188
Net (Loss) / Profit from operations			(604,082	)			(692,874	)			(2,195,049	)			(1,977,548	)
Foreign Currency Adjustments			(21,601	)			11,103				266				21,867
Comprehensive (Loss) / Profit		$	(625,683	)		$	(681,771	)		$	(2,194,783	)		$	(1,955,681	)
Basic and Diluted Loss per Share		$	(0.01	)		$	(0.01	)		$	(0.04	)		$	(0.04	)
Basic and Diluted Weighted Average
Number of Shares Outstanding during the Period			61,076,413				51,412,261				60,540,104				52,942,556

The accompanying notes are an integral part of these consolidated financial statements.

DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
Consolidated Statements of Cash flows
For the Six Months Ended June 30, 2010 and 2009

		For the Six Months Ended June 30,
		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(2,195,049	)		$	(1,977,548	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			—				14,611
Amortization of debt discount			48,351
Common Stock issued for compensation							370,000
Warrants issued for financing			945,614
Shares Issued — Services Rendered			128,500				—
Changes in operating assets and liabilities:
Increase / (Decrease) in prepaid expenses			201,832				69
Increase / (Decrease) in other current assets			(59	)			79
Increase / (Decrease) in Inventory			3,584				(2,557	)
Increase / (Decrease) in accounts payable			213,076				638,115
Increase / (Decrease) in other current liabilities			53,122				(34,065	)
Increase / (Decrease) in accrued expenses							7,651
Net Cash (Used In) Operating Activities			(601,029	)			(983,645	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of computers			—				(4,489	)
Advances			(57,000	)			—
Purchase of intangible assets			(548,893	)			(249,233	)
Net Cash (Used In) Investing Activities			(605,893	)			(253,722	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in cash overdraft			8,510				—
Proceeds from sale of common stock			698,000				643,199
Advances from Related Party			45,000				483,387
Repayments to Related Party			(220,000	)			—
Proceeds from exercise of warrants			800,000				—
Proceeds from note payable			—				300,000
Net Cash Provided By Financing Activities			1,331,510				1,426,586
Foreign Currency Adjustments			(127,010	)			21,866
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(2,422	)			211,085
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			3,218				51,014
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	796			$	262,099
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Interest paid		$	—			$	45,185
Income taxes		$	—				—
SUPPLEMENTAL DISCLOSURES OF NON CASH FLOWS INVESTING AND FINANCING ACTIVITIES:
Conversion of debt to equity		$	—			$	300,000
Conversion of accounts payable to equity		$	—			$	370,000

The accompanying notes are an integral part of these consolidated financial statements.

DOLPHIN DIGITAL MEDIA, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION:

Basis of Presentation and Organization

The accompanying unaudited condensed financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the six months ended June 30, 2010 are not necessarily indicative of results that may be expected for the year ending December 31, 2010. The condensed financial statements are presented on the accrual basis.

Dolphin Digital Media Inc (the “Company”), initially known as Rising Fortune Incorporated, was incorporated in the State of Nevada on March 7, 1995. The Company was inactive between the years 1996 and 2003. On November 19th, 2003, the Company amended its Articles of Incorporation to change its name to Maximum Awards Inc. On July 3 2007 the Company amended its Articles of Incorporation again to change its name to Logica Holdings Inc. On July 29 2008, the Company amended its Articles of Incorporation again to change its name to Dolphin Digital Media Inc

Dolphin Digital Media, Inc. is dedicated to the cause of online safety for children. By creating and managing child-friendly social networking websites utilizing state-of the-art fingerprint identification technology, Dolphin Digital Media has taken an industry-leading position with respect to internet safety, as well as digital entertainment

Dolphin Digital Media (Canada) Inc (Former Plays On The Net Inc) was incorporated in Ontario (Canada) on July 27 2006.] The Company changed it name on October 28, 2008.

Curtain Rising Inc was incorporated in Ontario (Canada) on October 19 2006. The company has no current operations, revenues or expenses.

On June 23 2008 Logica Holdings purchased 100% of Dolphin Digital Media Inc. The Company issued a total of 24,063,735 of common shares, equivalent to 51% of its outstanding common stock, for the acquisition of Dolphin Digital Media Inc resulting in a change of control. The total amount of issued and outstanding share for the period ended June 30, 2008 was 47,183,793. The acquisition was accounted for as a reverse merger transaction with Logica Holdings. Historical financials are those of Logica Holdings.

NOTE 2 — GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. The Company has losses for the six months ended June 30, 2010 of $2,194,783. As of June 30, 2010 the Company recorded an accumulated deficit of approximating $29,724,192. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

NOTE 3 — SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Principles of Consolidation

The accompanying financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company and its wholly owned subsidiaries. The accompanying consolidated financial statements include the accounts of Dolphin Digital Media Inc and its subsidiaries Plays On The Net Plc, Dolphin Digital Media (Canada) Inc, and Curtain Rising Inc and. for the three and six months ended June 30, 2010 and 2009. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Reclassification

Certain prior period amounts have been reclassified to conform to June 30, 2010 presentations.

Revenue Recognition

The Company recognizes the monthly and annual subscription revenues over the service period. Advertising revenue is recognized over the period the advertisement is displayed. Online shopping revenues and affiliate commission income are both recognized when a customer incurs in a purchase.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At June 30, 2010 and December 31, 2009, there were no cash and cash equivalents. Cash and cash equivalents are defined to include cash on hand and cash in the bank.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. These inventories consisted of fingerprint readers. At June 30, 2010 and December 31 2009 the value of the company’s inventory was $88,276 and $91,860, respectively.

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives to be used to calculate depreciation for principal items of property and equipment are as follow:

		Depreciation/
		Amortization
Asset Category		Period
Furniture and Fixture		5 Years
Computer equipment		3 Years
Leasehold improvements		5 Years

Goodwill and Intangible Assets

The Company adopted Accounting Standard Codification (“ASC”) Topic 350, formerly, Statement of Financial Accounting Standard (“SFAS”) No. 142, Goodwill and Other Intangible Assets, effective July 1, 2002. As a result, the Company discontinued amortization of goodwill, and instead annually evaluates the carrying value of goodwill for impairment, in accordance with the provisions of ACS Topic 350, formerly SFAS No. 142. Goodwill and indefinite-lived intangible represents the excess of the cost of investments in subsidiaries over the fair value of the net identifiable assets acquired. The Company holds licenses and expects both licenses and the cash flow generated by the use of the licenses in order to operate the platform to continue indefinitely due to the likelihood of continued renewal at little or no cost.

Impairment of Long-Lived Assets

The Company accounts for long-lived assets under the FASB Accounting Standards Codification No.’s 350 and 360 Intangibles — Goodwill and Other and Property, Plant and Equipment. In accordance with FASB ASC No.’s 350 and 360, long-lived assets, Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate a potential impairment. If it is determined that an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value and classified as “Impairment” in the consolidated statement of operations.

Comprehensive Income

The Company has adopted ACS Topic 220, formerly SFAS No. 130, “Reporting Comprehensive Income” (“SFAS 130”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’ Equity.

Comprehensive income comprises a gain on foreign translation.

Foreign Currency Translation

The functional currency of the Company is the United States Dollar. The financial statements of the Company’s Canadians subsidiary translated to the United States dollars using the period exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. Net gains and losses resulting from foreign exchange translations are included in the statements of operations and stockholders’ equity as other comprehensive income (loss).

Loss per share

The Company has adopted FASB Accounting Standards Codification No. 260 Earnings Per Share, Loss per common share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the period. Stock warrants were not included in the computation of loss per share for the periods presented because their inclusion is anti-dilutive. The total potential dilutive warrants and stock options outstanding at June 30, 2010 was 11,242,944. There were no dilutive securities outstanding for the period ended June 30, 2010.

Business Segments

The Company operates the following business segments:

	1)		Dolphin Digital Media (USA): The Company’s primary business model is monthly and annual membership fees in the US for subscription to Dolphinsecure.com.
	2)		Dolphin Digital Media (Canada): The Company’s primary business model is monthly and annual membership fees in Canada for subscription to Dolphinsecure.com.

Fair Value of Financial Instruments

Fair value of certain of the Company’s financial instruments including cash and cash equivalents, inventory, account payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

Level 1

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities;

Level 2

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3

Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

Concentration of Credit Risk

The Company did not have cash in banks in excess of FDIC insurance limits at June 30, 2010 and December 31, 2009. During the year ended Three months Ended March 31, 2010 the Company’s did not have a concentration of sales. During the three and six months ended June 30, 2009 the Company did not have any sales.

Recent Accounting Pronouncements

Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.

In June 2009, the FASB issued Financial Accounting Standards Codification No. 860 — Transfers and Servicing. FASB ASC No. 860 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. FASB ASC No. 860 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of FASB ASC No. 860 will have on its financial statements.

In June 2009, the FASB issued Financial Accounting Standards Codification No. 810 — Consolidation. FASB ASC No. 810 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of FASB ASC No. 810 will have on its financial statements.

In June 2009, the FASB issued Financial Accounting Standards Codification No. 105-GAAP. The FASB Accounting Standards Codification (“Codification”) will be the single source of authoritative nongovernmental U.S. generally accepted accounting principles. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. FASB ASC No. 105 is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards are superseded as described in FASB ASC No. 105. All other accounting literature not included in the Codification is nonauthoritative. The Adpotion of FASB ASC No. 105 did not have a impact on our financial statements.

NOTE 4 — ADVANCES

On June 28, 2010 – The Company signed a letter of intent to acquire 24eight, LLC (www.24eight.com), a privately held company based in Manhattan. 24eight is a technology company that specializes in real-time motion and pressure analytics and the wireless transmission of collected data. The transaction is subject to customary due diligence and execution of a definitive agreement. A full description of the transaction, and the combined businesses, will be released upon finalization of the acquisition. As of June 30, 2010 The Company has advanced 24eight, LLC a total of $57,000 to fund operation.

NOTE 5 — INTANGIBLE ASSETS

The Company has intangible assets as of June 30, 2010 and December 31, 2009 as follows:

		June 39,				December 31,
		2010				2009
Other intangible assets		$	29,924			$	29,924
Dolphin Secure Websites			1,727,237				1,178,344
Total		$	1,757,161			$	1,208,268

NOTE 6 — NOTES PAYABLE — CONVERTIBLE

		June 30,				December 31,
		2010				2009
Note Amount		$	300,000			$	300,000
Discount			(42,000	)			(84,000	)
Net		$	258,000			$	216,000

In January 2009 the Company received proceeds of $200,000 from a note payable. The note bears interest at a rate of 10% per annum and is convertible at $.50 per share. The note is due two years from the date of issuance. Accrued interest at June 30, 2010 and December 31, 2009 amount to $29,534 and $19,616, respectively. The Company recorded beneficial conversion of $112,000. The Company is amortizing the beneficial conversion over the term of the note. Amortization expense for the three and six months ended June 30, 2010 and December 31, 2009 amounted to $14,000, $28,000 and $56,000, respectively.

In March 2009 the Company received proceeds of $100,000 from a note payable. The note bears interest at a rate of 10% and is convertible at $.50 per share. The note is due two years from the date of issuance. Accrued interest at June 30, 2010 and December 31, 2009 amount to $12,493 and $7,534, respectively. The Company recorded beneficial conversion of $56,000. The Company is amortizing the beneficial conversion over the term of the note. Amortization expense for the three and six months ended June 30, 2010 and December 31, 2009 $7,000, $14,000 and $28,000, respectively.

NOTE 7 — NOTE PAYABLE RELATED PARTY

As of June 30, 2010 and December 31, 2009 The Company’s CEO had loaned the Company a total of $904,000 and $1,079,000, respectively. During the six months ended June 30, 2010 The Company’s CEO loaned the Company an additional $45,000 and received repayments of $220,000. The note accrues interest at a rate of 10%. Accrued interest amounted to $165,757 and $111,278 at June 30, 2010 and December 31, 2009, respectively.

NOTE 8 — NOTE PAYABLE — CONVERTIBLE

In July 2009 the Company entered into a convertible promissory note in the amount of $300,000. The Company has agreed to issue 231,000 common stock warrants at an exercise price of $.0001 pursuant to the note agreement. The note is convertible into 769,231 shares of common ($.39 per share) and 384,616 common stock warrants with an exercise price of $.80. The Note is due July 29, 2015. The fair value of the warrants was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0%, volatility 121%, risk-free interest rate of 1%, and expected warrant life of 6 months The fair value of the warrants on the date of issuance was $76,207. The Company will amortize the value of the warrants over the term of the note. For the Three and six months ended June 30, 2010 the Company recorded amortization expense of $3,176 and $6,351 , respectively related to the note.

		June 30,				December 31,
		2010				2009
Note Amount		$	300,000			$	300,000
Discount			(63,506	)			(69,857	)
Net		$	236,494			$	230,143

NOTE 9 — LICENSING AGREEMENTS

The Company recognizes a ten year licensing agreement between Dolphin Entertainment Inc. and Dolphin Digital Media Inc. Under the license, the Company is authorized to use Dolphin Entertainment’s brand properties in connection with the creation, promotion and operation of subscription based Internet social networking websites for children and young adults. The license requires that the Company pays to Dolphin Entertainment royalties at the rate of fifteen percent of net sales from performance of the licensed activities. No sales were recorded during the year ended December 31, 2009 and the six months ended June 30, 2010

NOTE 10 — STOCKHOLDERS EQUITY

A) Preferred Stock

The Company’s Articles of Incorporation authorize the issuance of 10,000,000 shares of $0.001 par value preferred stock. The Board of Directors has the power to designate the rights and preferences of the preferred stock and issue the preferred stock in one or more series.

a) On October 4, 2007 the Company issued 250,000 preferred shares for a cash consideration of $250,000. These preferred shares are convertible by the investor into 2.5 shares of common stock or $ .40 per share.

b) On November 7, 2007 the Company issued 250,000 preferred shares for a cash consideration of $250,000. These preferred shares are convertible by the investor into 2.0833 shares of common stock or $ .48 per share.

As of June 30, 2010, the Company had 500,000 preferred shares issued and outstanding.

On October 4th 2007, the company entered into a financing agreement whereby Warrants were issued to an investor to purchase the following amounts of common stock:

	a)		650,000 shares of common stock exercisable at $0.72 per share.
	b)		1,500,000 shares of common stock exercisable at $1.00 per share.
	c)		1,500,000 shares of common stock exercisable at $2.00 per share.

On March 10, 2010 the Company and T Squared Investments LLC agrees to cancel the following warrants:

	•		Warrant “A” for 650,000 shares;
	•		Warrant “B” for 1,500,000 shares;
	•		Warrant “C” for 1,500,000 shares; and,
	•		Warrant “4” for 384,615 shares.

Post such cancellation, the only warrants held by T Squared Investments LLC was their existing Warrant “D” for 231,000 shares with an exercise price of $0.0001 per share and the following warrant below. Pursuant to this agreement the expiration date of Warrant “D” was reduced from July 28, 2014 to December 31, 2012.

In consideration for the cancellation of such warrants above and for the payment to the DPDM described below, T Squared Investments LLC was issued a new Warrant “E” for 7,000,000 shares of DPDM with an expiration date of December 31, 2012 and an exercise price of $0.25 per share.

T Squared Investments LLC wired Two Hundred Thousand Dollars ($200,000) to the Company, which resulted in the effective reduction of the exercise price of Warrant “E” from $0.25 per share to $0.2214 per share. T Squared Investments LLC can continually pay the Company an amount of money to reduce the exercise price of Warrant “E” until such time as the exercise price of Warrant “E” is effectively $0.0001 per share. Each time a payment by T Squared Investments LLC is made to DPDM, a side letter will be executed by both parties that states the new effective exercise price of Warrant “E” at that time. At such time when T Squared Investments LLC has paid down Warrant “E” to an exercise price of $0.0001 per share or less, T Squared Investments LLC shall have the right to exercise Warrant “E” via a cashless provision and hold for six months to remove the legend under Rule 144.

T Squared Investments LLC may not exercise such warrant if post the exercise, T Squared Investments LLC would be above the 9.99% ownership level of the Company. All terms of this letter and Warrant E (as laid out in the Warrant “E”) are effective upon execution by both parties as of the date written above.

, T Squared Investments LLC has the following warrants outstanding.

New Warrant “E”:		Amount:		7,000,000 shares
		Exercise price:		$0.2214 per share
		Expiration Date:		12/31/2012
New Warrant “D”:		Amount:		231,000 shares
		Exercise price:		$0.0001 per share
		Expiration Date:		2/31/2012

The Warrants contain cashless exercise provisions and are exercisable until October 4th, 2011.

The Company incurred an expense of $966,649 as a result of the repricing of these warrants. The fair value of the warrants was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0%, volatility 136%, risk-free interest rate of 1%, and expected warrant life of 18 months

On April 6, 2010 T-Squared Investments, LLC paid down an additional $200,000 reducing the exercise price on the warrants to $.1928.

On May 17, 2010 T-Squared Investments, LLC paid down an additional $200,000 reducing the exercise price on the warrants to $.1643.

On June 18, 2010 T-Squared Investments, LLC paid down an additional $200,000 reducing the exercise price on the warrants to $.1357.

B) Common Stock

The company’s Articles of Incorporation authorize the issuance of 100,000,000 shares at $0.015 par value.

The following transactions occurred during the six months ended June 30,, 2010:

During the six months ended June 30, 2010 the Company sold to two individuals a total of 600,000 shares of common for $150,000 ($.25 per share).

During the six months ended June 30, 2010 the Company sold to eleven individuals a total of 1,584,854 shares of common for $523,000 ($.33 per share). In addition the Company issued 792,427 common stock warrants with an exercise price of $1.00.

During the six months ended June 30, 2010 the Company sold to an investor 64,103 shares of common for $25,000 ($.39 per share). In addition the Company issued 64,103 common stock warrants with an exercise price of $.80.

Common stock issued for services

In February, 2010 the Company issued a total of 250,000 shares of common stock for services valued at $72,500 ($.33 per share) the fair market value on the date of issuance.

In April, 2010 the Company issued a total of 175,000 shares of common stock for services valued at $56,000 ($.32 per share) the fair market value on the date of issuance.

NOTE 11 — STOCK OPTION PLAN

As of June 30, 2010, the Company had not implemented a stock option plan.

NOTE 12 — COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company headquarters is in Miami, Florida, where it leases office space at $3,237 per month.

NOTE 13 — LITIGATION

On October 1, 2009, Dolphin Digital Media, Inc, Dolphin Entertainment, Inc. and Dolphin Entertainment Capital, Inc. brought suit in the U.S. District Court for the Southern District of Florida against Mark Peikin, Joshua M. Gold, Bespoke Growth Partners, Inc., Gsquared, Ltd., Carta De Dinero, LLC, Nevada Agency And Transfer Co. and Merrill Lynch Pierce Fenner & Smith Incorporated. The suit seeks recovery of corporate stock and damages occasioned by the misfeasance of Peikin, Gold and the corporate entities over which they presided (Bespoke, Gsquared, Carta De Dinero) were employed to divert Plaintiff’s money and opportunities. As alleged in the complaint, Peikin and Gold served as outside and inside counsel to and officers of Plaintiffs in 2008 and 2009, as further alleged. In the course of their affiliation with Plaintiffs, they were able to use their positions of trust to gain access to Plaintiffs’ assets and opportunities and divert same to Bespoke, Gsquared and Carta De Dinero. Among their actions, the Company alleged Peikin and Gold improperly directed Nevada Agency And Transfer Co. to issue one million shares of Dolphin Digital Media, Inc.’s stock to Carta De Dinero, who then transferred such shares to its account at Merrill Lynch and sold them on the open market. In this lawsuit, Plaintiffs seek recovery of the damages occasioned by the improper issuance and sale of the Dolphin Digital Media, Inc. stock, as well as the value of the actual funds and opportunities misappropriated by Peikin and Gold and also alleged civil racketeering counts. On or about April 19, 2010, the Court dismissed the civil racketeering counts on the basis that the alleged enterprise was primarily formed and existed for the commission of the theft of the above-mentioned stock. The Court made no determination on the merits of the underlying allegations. As a result of the dismissal, the Court was deprived of jurisdiction over the cause.

On April 20, 2010, Peikin and Gold filed an action in Miami-Dade County Circuit Court against Dolphin Entertainment, Inc. and Dolphin Digital Media, Inc., respectively, relating to their employment with the companies. Peikin has sued Dolphin Entertainment, Inc. for: 1) breach of contract; 2) promissory estoppel; 3) fraud in the inducement; and 4) negligent misrepresentation and Gold has sued Dolphin Digital Media, Inc. for negligent misrepresentation. On or about May 10, 2010, Dolphin Entertainment, Inc. and Dolphin Digital Media, Inc. filed their Answer, Affirmative Defenses, Counterclaim against Peikin and Gold and a Third Party Claim against Bespoke Growth Partners, Inc., Gsquared, Ltd. and Carta De Dinero, LLC, alleging virtually the same counts alleged in the action filed in the U. S. District Court action. The Counterclaim and the Third-Party Claim allege among other things, fraud, civil theft, unjust enrichment and conversion and seek an accounting. Discovery has been served and the ultimate results of these proceedings cannot be predicted with certainty.

On or about January 25, 2010, an action was filed by Tom David against Winterman Group Limited, Dolphin Digital Media (Canada) Ltd., Malcolm Stockdale and Sara Stockdale in the Superior Court of Justice in Ontario (Canada) alleging breach of a commercial lease and breach of a personal guaranty. On or about March 18, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Statement of Defense and Crossclaim. In the Statement of Defense, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale deny any liability under the lease and guaranty. In the Crossclaim filed against Dolphin Digital Media (Canada) Ltd., Winterman Group Limited, Malcolm Stockdale and Sara Stockdale seek contribution or indemnity against Dolphin Digital Media (Canada) Ltd. alleging that Dolphin Digital Media (Canada) agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. On or about March 19, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Third Party Claim against the Company seeking contribution or indemnity against the Company, formerly known as Logica Holdings, Inc., alleging that the Company agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. The Third Party Claim was served on the Company on April 6, 2010. On or about April 1, 2010, Dolphin Digital Media (Canada) filed a Statement of Defense and Crossclaim. In the Statement of Defense, Dolphin Digital Media (Canada) denied any liability under the lease and in the Crossclaim against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale, Dolphin Digital Media (Canada) seeks contribution or indemnity against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale alleging that the leased premises were used by Winterman Group Limited, Malcolm Stockdale and Sara Stockdale for their own use. On or about April 1, 2010, Dolphin Digital Media (Canada) also filed a Statement of Defense to the Crossclaim denying any liability to indemnify Winterman Group Limited, Malcolm Stockdale and Sara Stockdale. The Company has yet to respond to the Third Party Claim. The ultimate results of these proceedings against the Company cannot be predicted with certainty.

NOTE 14 — RELATED PARTY TRANSACTIONS

Related party transactions with Mr. William O’Dowd IV, CEO of the Company:

As of June 30, 2010 and December 31, 2009 The Company’s CEO had loaned the Company a total of $904,000 and $1,079,000, respectively. During the six months ended June 30, 2010 The Company’s CEO loaned the Company and additional $45,000 and received repayments of $220,000. The not accrues interest at a rate of 10%. Accrued interest amounted to $165,757 and $111,278 at June 30, 2010 and December 31, 2009, respectively.

NOTE 15 — SUBSEQUENT EVENTS

On July 6, 2010 the Company sold 700,000 shares of common stock for proceeds of $175,000.00 ($. 25 per Share)

On July 16, 2010 T-Squared Investments, LLC paid down an additional $100,000 reducing the exercise price on the warrants to $.1214.

On July 17, 2010 the Company sold 200,000 shares of common stock for proceeds of $50,000.00 ($. 25 per Share)

On July 23, 2010 the Company sold 700,000 shares of common stock for proceeds of $175,000.00 ($. 25 per Share)

On August 12, 2010 T-Squared Investments, LLC paid down an additional $100,000 reducing the exercise price on the warrants to $.1072,

Subsequent to June 30, 2010 the Company made additional advances to 24eight, LLC in the amount of $113,500

The company evaluated subsequent events through the filing date of August 23, 2010.

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Summary

Dolphin Digital Media, Inc. is dedicated to the cause of online safety for children. By creating and managing child-friendly social networking websites utilizing state-of the-art fingerprint identification technology, Dolphin Digital Media has taken an industry-leading position with respect to internet safety, as well as digital entertainment.

Our Signature Product

Dolphin Secure is easy-to-use software that downloads onto any computer in a child’s life, and gives parents the ability to guide where their children can go, and who they can talk to, while online.

How “Dolphin Secure” Works: Fingerprint Log-In

In a truly revolutionary offering, and one of the major aspects that makes Dolphin Secure a unique service, a child may fully utilize the “Dolphin Surf” social network and communicate with their friends only following Dolphin Secure fingerprint identification. Upon registration, a new user scans their finger using the Dolphin Secure UPEK fingerprint reader. The scanned fingerprint is then converted into a number and stored in a protected, remote database.

The child’s account details (e.g. parental settings and personal preferences) are associated with this number, which is created by an irreversible algorithm. A copy (or a “print”) of any user’s actual fingerprint is never taken, let alone stored anywhere within the Dolphin Secure system. Only the unique number created by any user’s unique fingerprint is kept.

After registration, each time an internet browser or an IM application is attempted to be used on the computer that is Dolphin Secure, a log-in page is triggered. Children simply enter their user name and scan their fingerprint. Dolphin Secure then verifies the child’s identity by matching the unique number created by this fingerprint scan with the number associated with the child’s user name in the Dolphin Secure database.

Once a match has been created, the Dolphin Secure system promptly loads each child’s personal, customizable home page within Dolphin Surf. That child is now free to surf to websites, and free to seek other children to be friends with, that are within the controls established by the parent. When parents or other adults in the household want to use the same computer, a master username and password can be entered, which unlocks the computer and allows them to freely access the Internet. Once the parent logs out, Dolphin Secure is automatically back in place for the next session.

“Dolphin Surf”

“Dolphin Surf” is a social network featuring the advanced functionality associated with the leading online communities and virtual worlds. Kids have the opportunity to create a profile, IM with approved friends, search for new friends, upload photos, send e-mails and customize a homepage that includes a widget library of content, friend updates and much more, all under the protection of the Dolphin Secure system. Children can set their own site themes, backgrounds and add or delete widgets on their homepage, making their Dolphin Surf experience totally unique to them.

“Dolphin Groups”

The launch of Dolphin Groups in February 2010 allows all children’s organizations (e.g. schools, little leagues, after-school programs, charitable organizations, etc.) to create their own mini-sites within Dolphin Surf.

Any group will have the ability to upload content such as videos and photos to the group page, send out messages to the whole group, write on an individual member’s “wall,” create a calendar, schedule events, and much more. Of course, the group sites have the full instant messaging capability that is a revolutionary aspect of Dolphin Secure, thereby allowing the children to chat live with each other while viewing the group’s site. For the first time, a children’s organization can safely create their own environment with full online interactivity occurring by their children.

Dolphin Surf offers different levels of privacy for any group, including: (1) Open: where any child within Dolphin Surf can join (e.g. a “fan club” started by a child in support of a favorite television show), or (2) Semi-Private: where a group administrator can set parameters for who can join their group, such as age range or gender (e.g. a particular Little League Division only open to boys and girls twelve and under), or (3) Private: where a group administrator will have to review and approve each individual who requests to join the group (e.g.: a specific Little League team).

In May, 2010, the functionality of Dolphin Groups was expanded to include the option for group administrators to charge membership fees, on either a monthly or annual basis. Furthermore, the option for individual groups within Dolphin Surf to link to one another was also released.

Links between groups can be either single-direction or dual-direction. Single-direction groups simply means that only the members from one group are automatically invited to join the other group, but not the other way around (i.e. members of a particular local Girl Scout Troop are invited to join the group site for the Girl Scouts in that particular state, but not every Girl Scout in the state is invited to join the group site for that particular local Girl Scout Troop). Dual-direction groups simply means that the members from each group are automatically invited to join the other group (e.g. upon entering into the fan club for the leading actress of a popular television show, a member is automatically invited to the fan club for the leading actor of the same television show, and vice versa).

Management believes that these dual features of affiliation and monetization create a unique and compelling opportunity for any children’s organization or content owner to have their online experience benefit from Dolphin Secure.

Pricing & Availability

An annual child membership to Dolphin Secure costs $59.95 per year (approx. $5 per month) plus an additional one-time fee of $15.00 for a fingerprint reader. Each additional child membership is $29.95 per year; a parent account is free. As of June 30, 2010, a monthly subscription can be purchased for $5.95 per month for the first child, and $2.95 per month for each additional child in the household. Parents pay per child on their family account, not per software download. This way, a family can download Dolphin Secure onto every computer in the home for no additional charge. Extra fingerprint readers can be purchased for $24.95 each.

Dolphin Secure currently works for PCs using Windows XP or Vista operating systems, as well as Mac computers using the Safari operating system.

Approach to Market

In February 2010, we announced a strategic partnership with the United Way of Miami-Dade to promote Dolphin Secure. The United Way of Miami-Dade is committed to helping Dolphin Digital Media in raising awareness around the importance of internet safety for children and the benefits of Dolphin Secure. Through this strategic partnership, the United Way of Miami-Dade will work with Dolphin Digital Media to expand its reach into key markets and audiences.

The first results of this strategic partnership were recognized later in February with the announcement that Dolphin Digital Media and the United Way of Miami-Dade had entered into an alliance with the Miami-Dade County Public Schools to promote Dolphin Secure. Miami-Dade County Public Schools is the fourth-largest public school system in the country, with a diverse enrollment of more than 342,000 students from over 100 countries at its 392 schools. Miami-Dade County Public Schools also has 50,271 employees, including 22,006 teachers. In addition to the safety benefits of Dolphin Secure, all parties are excited about utilizing Dolphin’s biometric authentication to help deliver on the promise of “virtual schooling,” including online classes available to all students, as well as live chat for homework help and tutoring.

In March 2010, we entered into a partnership with the Girl Scout Council of Tropical Florida to promote Dolphin Secure and to utilize Dolphin Secure’s group functionality. The campaign, “SOS: Speak Online Safely,” began March 25, 2010. The Girl Scout Council of Tropical Florida has over 700 troops and over 16,000 members between Miami-Dade County and Monroe County. Each troop will have their own group within Dolphin Surf, open only to their members, while the Council as a whole with have a group open to all 16,000 Girl Scouts in Miami-Dade and Monroe counties. Also, the Girl Scout Council of Tropical Florida will start other groups for additional programs they offer, all open only to the girls that participate in those programs, as well as groups open to all girls, whether they are current Girl Scouts or not. This partnership is a wonderful example of the clear benefits that the group functionality within Dolphin Secure offers to all children’s organizations, large or small.

Management is currently exploring additional sales channels, including electronic retail and traditional brick and mortar.

Results for the three months ended June 30, 2010 compared to the three months ended June 30, 2009

Revenues increased by $222 from $0 for the three months ended June 30, 2009 to $222 for the three months ended June 30, 2010 the Company has begun to generate limited revenues during the six months ended June 30, 2010. The Company expects to begin generating revenues from DolphinSecure and Dolphin Surf websites in the third quarter of 2010.

The cost of sales for the three months ended June 30, 2010 was $80 opposed to $0 for the three months ended June 30, 2009. The $80 increase was due to Company’s limited sales during the three months ended June 30, 2010.

The Company’s general and administration costs decreased by $401,200 from $602,060 for the three months ended June 30, 2009 to $200,860 for the three months ended June 30, 2010 as a result of decreased marketing and administrative costs.

The total expenditure for the three months ended June 30, 2010 was $545,591 opposed to $669,940 for the quarter ended June 30 , 2009. The decrease was a result of decreased marketing, administrative costs and professional fees.

The total other expenses for the three months ended June 30, 2010 was $58,633 opposed to $22,934 for the quarter ended June 30 , 2009. The increase was a result of $21,000 amortization of warrants and in increase of in interest expense of $14,696.

The net loss was $625,683 or $(.01) per share based on 61,076,413 weighted average shares outstanding for the three months ended June 30, 2010 compared to a loss of $681,771 or $(.01) per share based on 51,412,261 weighted average shares outstanding for the three months ended June 30, 2009.

Results for the six months ended June 30, 2010 compared to the six months ended June 30, 2009

Revenues increased by $478 from $0 for the six months ended June 30, 2009 to $478 for the Six months ended June 30, 2010 the Company has begun to generate limited revenues during the six months ended June 30, 2010. The Company expects to begin generating revenues from DolphinSecure and Dolphin Surf websites in the third quarter of 2010.

The cost of sales for the six months ended June 30, 2010 was $320 opposed to $0 for the Six months ended June 30, 2009. The $320 increase was due to Company’s limited sales during the three months ended June 30, 2010.

The Company’s general and administration costs decreased by $1,142,958 from $1,714,042 for the six months ended June 30, 2009 to $571,084 for the six months ended June 30, 2010 as a result of decreased marketing and administrative costs.

The total expenditure for the six months ended June 30, 2010 was $1,131,817 opposed to $1,932,360 for the quarter ended June 30, 2009. The decrease was a result of decreased marketing, administrative costs and increased professional fees.

The total other expenses for the three months ended June 30, 2010 was $1,063,390 opposed to $45,188 for the quarter ended June 30, 2009. The increase was a result of $966,649 for the restructuring or warrants, 21,000 amortization of warrants and in increase in interest expense of $30,550.

The net loss was $2,195,049 or $(.04) per share based on 60,540,104 weighted average shares outstanding for the six months ended June 30, 2010 compared to a loss of $1,955,681 or $(.04) per share based on 52,942,5564 weighted average shares outstanding for the six months ended June 30, 2009.

Liquidity and Capital Resources

Through the six months ended June 30, 2010 we have relied on advances of $45,000 from our President and CEO. We received $800,000 from the pay down of warrants. We sold a total of 2,248,957 shares of common stock for proceeds of $698,000 As of June 30, 2010, we had cash of $796, a cash overdraft of $22,597 and a working capital deficit of $3,182,727.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (CEO) who also serves as the Company’s principal financial officer (PFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act) as of the end of the period covered by the report. Based upon that evaluation, the Company’s CEO and PFO concluded that as of June 30, 2010 the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 1, 2009, Dolphin Digital Media, Inc, Dolphin Entertainment, Inc. and Dolphin Entertainment Capital, Inc. brought suit in the U.S. District Court for the Southern District of Florida against Mark Peikin, Joshua M. Gold, Bespoke Growth Partners, Inc., Gsquared, Ltd., Carta De Dinero, LLC, Nevada Agency And Transfer Co. and Merrill Lynch Pierce Fenner & Smith Incorporated. The suit seeks recovery of corporate stock and damages occasioned by the misfeasance of Peikin, Gold and the corporate entities over which they presided (Bespoke, Gsquared, Carta De Dinero) were employed to divert Plaintiff’s money and opportunities. As alleged in the complaint, Peikin and Gold served as outside and inside counsel to and officers of Plaintiffs in 2008 and 2009, as further alleged. In the course of their affiliation with Plaintiffs, they were able to use their positions of trust to gain access to Plaintiffs’ assets and opportunities and divert same to Bespoke, Gsquared and Carta De Dinero. Among their actions, the Company alleged Peikin and Gold improperly directed Nevada Agency And Transfer Co. to issue one million shares of Dolphin Digital Media, Inc.’s stock to Carta De Dinero, who then transferred such shares to its account at Merrill Lynch and sold them on the open market. In this lawsuit, Plaintiffs seek recovery of the damages occasioned by the improper issuance and sale of the Dolphin Digital Media, Inc. stock, as well as the value of the actual funds and opportunities misappropriated by Peikin and Gold and also alleged civil racketeering counts. On or about April 19, 2010, the Court dismissed the civil racketeering counts on the basis that the alleged enterprise was primarily formed and existed for the commission of the theft of the above-mentioned stock. The Court made no determination on the merits of the underlying allegations. As a result of the dismissal, the Court was deprived of jurisdiction over the cause.

On April 20, 2010, Peikin and Gold filed an action in Miami-Dade County Circuit Court against Dolphin Entertainment, Inc. and Dolphin Digital Media, Inc., respectively, relating to their employment with the companies. Peikin has sued Dolphin Entertainment, Inc. for: 1) breach of contract; 2) promissory estoppel; 3) fraud in the inducement; and 4) negligent misrepresentation and Gold has sued Dolphin Digital Media, Inc. for negligent misrepresentation. On or about May 10, 2010, Dolphin Entertainment, Inc. and Dolphin Digital Media, Inc. filed their Answer, Affirmative Defenses, Counterclaim against Peikin and Gold and a Third Party Claim against Bespoke Growth Partners, Inc., Gsquared, Ltd. and Carta De Dinero, LLC, alleging virtually the same counts alleged in the action filed in the U. S. District Court action. The Counterclaim and the Third-Party Claim allege among other things, fraud, civil theft, unjust enrichment and conversion and seek an accounting. Discovery has been served and the ultimate results of these proceedings cannot be predicted with certainty.

On or about January 25, 2010, an action was filed by Tom David against Winterman Group Limited, Dolphin Digital Media (Canada) Ltd., Malcolm Stockdale and Sara Stockdale in the Superior Court of Justice in Ontario (Canada) alleging breach of a commercial lease and breach of a personal guaranty. On or about March 18, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Statement of Defense and Crossclaim. In the Statement of Defense, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale deny any liability under the lease and guaranty. In the Crossclaim filed against Dolphin Digital Media (Canada) Ltd., Winterman Group Limited, Malcolm Stockdale and Sara Stockdale seek contribution or indemnity against Dolphin Digital Media (Canada) Ltd. alleging that Dolphin Digital Media (Canada) agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. On or about March 19, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Third Party Claim against the Company seeking contribution or indemnity against the Company, formerly known as Logica Holdings, Inc., alleging that the Company agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. The Third Party Claim was served on the Company on April 6, 2010. On or about April 1, 2010, Dolphin Digital Media (Canada) filed a Statement of Defense and Crossclaim. In the Statement of Defense, Dolphin Digital Media (Canada) denied any liability under the lease and in the Crossclaim against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale, Dolphin Digital Media (Canada) seeks contribution or indemnity against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale alleging that the leased premises were used by Winterman Group Limited, Malcolm Stockdale and Sara Stockdale for their own use. On or about April 1, 2010, Dolphin Digital Media (Canada) also filed a Statement of Defense to the Crossclaim denying any liability to indemnify Winterman Group Limited, Malcolm Stockdale and Sara Stockdale. The Company has yet to respond to the Third Party Claim. The ultimate results of these proceedings against the Company cannot be predicted with certainty.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2010, the Company sold to two individuals a total of 37,880 shares of common stock for $12,500 ($0.33 per share), and issue 18,940 common stock warrants with an exercise price of $1.00.

In April 2010, the Company issued 175,000 shares of common stock for services rendered valued at $56,000 ($.32 per share), the fair market value on the date of issuance.

In July 2010, the Company sold to three investors a total of 1,600,000 shares of common stock for $400,000 ($.25 per share).

The shares above were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. Purchasers received current information relating to the Company and had the ability to ask questions about the Company. Certificates representing the securities contain appropriate restrictive legends.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

No.
	31.1			Certification of the Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1			Certification of the Chief Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized August 23, 2010.